Insurance development and the finance-growth nexus: Evidence from 34 OECD countries
Rudra P. Pradhan,
Mak Arvin () and
Neville R. Norman
Journal of Multinational Financial Management, 2015, vol. 31, issue C, 1-22
This paper examines causal relationships between insurance market development, financial development, and economic growth in 34 OECD countries for the period 1988–2012. Insurance market development is defined in terms of life, non-life, and total insurance pervasiveness, both by density and penetration. Financial development is a composite index constructed from eight financial development indicators relating to banking and stock markets. We use a panel vector auto-regression model to reveal the nature of Granger causality among the variables. Our results reveal that insurance market development specifically and financial market development overall seem both to be long-run causative factors of economic growth. On the other hand, our short-run causality results show a diverse pattern of short-run adjustment dynamics between the variables, including the possibility of feedback between them in several instances.
Keywords: Insurance market development; Financial development; Economic growth; OECD countries (search for similar items in EconPapers)
JEL-codes: G10 G20 O2 O16 O20 O53 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:31:y:2015:i:c:p:1-22
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